House, Senate not finding common ground on franchise tax cut

NASHVILLE, Tenn. (WKRN) — Tennessee’s franchise tax on businesses is based on their property in the state.

But a new bill from Governor Bill Lee‘s office is set to do two things – refund businesses back three years who have paid a franchise tax and then also cut the tax moving forward.

It’s over a billion dollars for the refund and about $400 million each year after that.

“This is the right solution for the problem that was presented to us as a state,” Gov. Bill Lee (R-Tennessee) said. “This solution that we have put out there as a framework is the right way forward.”

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Thursday, the Senate passed the initiative.

The move incensed Senate Democrats, saying they don’t understand how this is a conservative fiscal decision.

“What happened today was a departure from long-standing practice and norms in this body to be fiscally responsible, to ensure that we’re being fully deliberate and have a sound basis for how we allocate taxpayer dollars,” Sen. Jeff Yarbro (D-Nashville) said.

But Senate Republicans say paying a lot upfront now will protect the state from fees from future potential lawsuits.

“Nobody likes it. Nobody likes having to vote for this, nobody likes having to do this,” Sen. Bo Watson (R-Hixson) said. “But in terms of being the best remedy that courts would look at, this is a reasonable solution anybody moving forward really doesn’t have any kind of basis for a challenge to the state on this.”

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The bill has yet to even begin the committee process in the House. In fact, the House has a different version of the same bill.

“The similar part will be the $400 million tax cut,” Speaker of the House Cameron Sexton (R-Crossville) said. “The other part will not be similar.”

It’s the latest inconsistency between the two chambers, as they are facing different versions or disagreements on the education voucher scholarship bill, several LGBTQ+ bills, and Tennessee State University.

When Senate leaders were asked about the House’s ideas around the franchise tax, they seemed frustrated by a lack of communication.

“We don’t speak for the House,” Watson said.

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“It’s hard to give you a better answer than that because we’re not sure just what they have in mind,” Senate Republican Caucus Chair Ken Yager (R-Kingston) said.

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